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Labor productivity: structural change and cyclical dynamics

By E.J. Bartelsman, John Haltiwanger and Martin Neil Baily


A longstanding puzzle of empirical economics is that average labor productivity declines during recessions and increases during booms. This paper provides a framework to assess the empirical importance of competing hypotheses for explaining the observed procyclicality. For each competing hypothesis we derive the implications for cyclical productivity conditional on expectations of future demand and supply conditions. The novelty of the paper is that we exploit the tremendous heterogeneity in long-run structural changes across individual plants to identify the short-run sources of procyclical productivity

Topics: Labor productivity, Business cycles, E32, E24
Publisher: Amsterdam. Vrije Universiteit
Year: 1995
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Provided by: DSpace at VU

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